In order for business income insurance to apply, what must occur, according to the usual business income insuring agreement?

must be an interruption of operations caused by property damage from a covered peril to property at locations or situations described in the policy, resulting in a loss of business income and/or extra expense

What must the "suspension" result from?

direct physical loss or damage to real or personal property caused by a covered cause of loss and occurring at the "premises" described in the declarations

What are the "operations" in relation to business activities of the insured and rental value coverage?

business activities of the insured that occur at the premises described in the declarations

in the case of rental value coverage, the "tenantability" (suitability for occupancy) of the described premises

When does the "period of restoration" begin and end?

begins 72 hours after physical loss occurs and ends when the property is (or should have been) restored to use with reasonable speed

Explain how extra expenses to repair or replace property are treated differently than other extra expenses in the Extra Expense insuring agreement

to repair/replace property covered only to the extent that they actually reduce the business income loss, other extra expenses (moving to a temporary location, increased rent at extra locations, etc.) and the cost of substitute services are covered in full, subject to the policy limit

Explain how the definition of premises is broadened if the insured is a tenant

broadened to include "any area within the building or on the site...if that area services or is used to gain access to, the described premises"

Explain a danger to an insured covered by the Business Income (without extra expense) Coverage Form regarding expenses incurred to reduce loss

the insured may incur extra expenses other than the reduction in business income loss, resulting in a large, uninsured extra expense loss

Explain the purpose of Alterations and New Buildings additional coverage in the business income coverage (BIC) forms

to provide coverage for loss of income resulting from a delay in beginning operations if the delay results from damage at the described premises by a covered cause of loss to any of the following: New buildings or structures (completed or not); alterations or additions to existing buildings; machinery, equipment, supplies or building materials located on or within 100 feet of the described premises (used in construction)

Compare writing the limits of insurance for business income on a specific basis with doing so on a blanket basis

Specific - specific limit is set for each building insured

Blanket - limit applies to all buildings at one location or to all buildings at multiple locations

Described how the amount of a business income loss is determined in the BIC

Net income of the business before the loss occurred

Probable net income of the business if no loss had occurred

Operating expenses that must continue during the period of restoration to permit the insured to resume operations with the quality of service that existed prior to loss

Other relevant sources of info

What are the different coinsurance percentages that can be used with the BIC?

50, 60, 70, 80, 90, 100, 125, or no coinsurance

How is the denominator of the business income coinsurance formula calculated?

multiplying coinsurance percentage by the sum of the insured's net income plus all operating expenses that would have been incurred in the absence of a loss for the 12-month period beginning at the inception or latest anniversary date of the policy

Identify the 3 optional business income coverages that eliminate or suspend the coinsurance condition

Maximum Period of Indemnity

Monthly Limit of Indemnity

Business Income Agreed Value

When is the only time insureds should add the Maximum Period of Indemnity coverage option to their business income insurance?

if they are certain that any suspension of operations will last no more than four months

Describe the two steps necessary to activate the Business Income Agreed Value coverage option

insurer must secure completed business income report/worksheet from insured

insurer must enter agreed value into declarations

Why is the Extended Period of Indemnity coverage option so attractive to insureds that won restaurants and clothing stores?

It extends EBI for losses that continue for more than 30 days, restaurants/clothing stores depend on strong customer relationships and repeat business, unlikely for income to return to normal within 30 days of reoperning